Dairy Cattle Supply Lien

Packet

Table of Contents

Appendix A. Memo ......................................................................................1-3

Appendix B. Perfection and Enforcement Checklist .........................................4

Appendix C. Lien Perfection and Enforcement Information Sheet ..................5

Appendix D. Notice of Claim of Lien ...........................................................6-11

Appendix E. Sample Copy of UCC Financing Statement ............................12-16

Appendix F. Notice to Make Payment ........................................................17-19

Appendix G. Sample Copy of UCC Termination Statement ........................20-24

Appendix H. Dairy Cattle Supply Lien LawCalifornia Food & Agriculture Code § 57401 et. seq ................................25-30

Prepared by:Daniel L. Egan, Esq.Steven J. Williamson, Esq.Wilke, Fleury, Hoffelt, Gould & Birney, LLPSacramento, California

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Introduction

The Dairy Cattle Supply Lien law was created in 1987, and revised in 2012, to give feed suppliers enhanced rights to collection of the amounts owed for the feed provided to dairies. The law creates a statutory lien in favor of feed suppliers (called “Lien Claimants”) on the proceeds of the sale of milk or milk products (referred to as “Proceeds”), to secure amounts owed by a dairy (the “Lien Debtor”) for the purchase of feed or materials.

The Lien The law creates a lien in favor of any person who provides feed or materials to aid the raising or maintaining of dairy cattle or offspring. The term “feed or materials” is defined broadly and includes commercial feed, grain, forage, feed ingredients, mineral feed, drugs, animal health products, customer-formula feed, any constituent nutrients of an animal ration, and generally any other food which is used for the feeding of dairy cattle. The lien attaches to the proceeds from the sale of milk or milk products produced from dairy cattle consuming the feed provided by the Lien Claimant. Generally the proceeds of the sale of the milk will be owed by the creamery or “handler” to the Lien Debtor. In certain circumstances proceeds payable from the handler that purchases milk from the Lien Debtor will be payable directly to the Lien Debtor’s bank or other lender pursuant to a milk proceeds assignment. In such case, the lien may attach to identifiable proceeds while in the possession of the lender to the extent that the lender is obligated to remit some or all of the proceeds back to the Lien Debtor. The lien on the proceeds terminates when the proceeds are paid to the Lien Debtor and commingled with other funds of the Lien Debtor. The Dairy Cattle Supply Lien secures the “reasonable or agreed charges for the feed or materials provided,” plus costs of enforcing the lien, up to the charges for feed provided within a 60-day period. However, only two feed suppliers (the first two to perfect their liens, as discussed below) can have an enforceable lien at any one time.

Creation and Perfection of the Lien

A Dairy Cattle Supply Lien arises upon the delivery of feed to a Lien Debtor, but the lien is only perfected, i.e., effective against competing creditors, when a Notice of Claim of Lien has been both filed with the Secretary of State and served on the Lien Debtor and certain other persons. The Notice of Claim of Lien is filed with the Secretary of State on the same form prescribed by the Secretary of State’s office for perfecting a personal property security interest. This form is commonly known as a UCC Financing Statement and can be currently found at http://www.sos.ca.gov/business/ucc/ra_9_ucc-1.pdf . The Dairy Cattle Supply Lien law requires certain additional information to be included in the Notice of Claim of Lien, including the name and address of the Lien Claimant and the Lien Debtor, the location of the dairy receiving the feed or materials, and that the Lien Claimant is claiming a dairy cattle supply lien.

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Within 10 days of filing of the Notice of Claim of Lien with the Secretary of State, the Lien Claimant must serve the notice on the Lien Debtor and certain other persons, who are generally other creditors also secured by the milk proceeds. These creditors will generally be conventional production lenders as well as other feed and material suppliers, but may also include judgment creditors as well. To obtain a list of these other secured creditors of the Lien Debtor, the Lien Claimant will need to conduct a lien search of the records of the Secretary of State.

Duration of the Lien

Once a Notice of Claim of Lien is filed, the lien remains in effect as long as the Lien Claimant remains unpaid for the feed supplied or the Lien Claimant is paid, but continues to provide feed or materials to the Lien Debtor on a regular basis. The statute states that “providing feed or materials shall not be deemed to be made on a regular basis if a period of more than 30 days elapses between deliveries.” In general, this means that if a Lien Claimant is paid in full and commences further deliveries to the Lien Debtor after a lapse of 30 days, the Lien Claimant will need to file and serve another Notice of Claim of Lien.

Priorities Among Conflicting Creditors

As noted above, a Lien Debtor may be subject to numerous liens on its milk proceeds. The

Dairy Cattle Supply Lien law provides that liens on the milk proceeds, whether created by consensual liens under the Commercial Code, judgment creditor claims, or Dairy Cattle Supply Liens, rank in priority by the time of perfection. Because perfection occurs by filing with the Secretary of State, the priority is essentially determined on a first to file basis.

Enforcement of the Lien

The 2012 revisions to the Dairy Cattle Supply Lien created a new method of enforcing the lien. Prior to the 2012 revisions, a Lien Claimant could enforce the lien only by filing an action against the Lien Debtor in the appropriate state or federal court. Under the 2012 revisions, the right to commence suit continues, but is supplemented by a non-judicial enforcement remedy. Under the 2012 revisions, upon default by a Lien Debtor, a Lien Claimant may enforce its lien by notifying any “handler” obligated to the Lien Debtor on milk proceeds to pay the proceeds directly to the Lien Claimant. The non-judicial remedy provided by the 2012 revisions does not require commencement of any legal proceedings. Once the notice is provided, the handler is obligated to pay the proceeds to the Lien Claimant and not the Lien Debtor, subject to certain exceptions and limitations.

This non-judicial foreclosure remedy only applies to proceeds in the possession of a “handler”, as that term is defined in Food and Agricultural Code section 61826. It does not apply to the proceeds in the possession of any other persons, such as lenders or other secured parties.

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The Lien Claimant may not demand that payment be made prior to 15 days following the date of the notice. This 15-day period presumably provides other parties with an opportunity to intervene if they claim priority in payment over the Lien Claimant.

After receiving an enforcement notice, the handler may continue to honor a prior milk proceeds assignment or to pay any lienholder with a lien prior to the lien asserted by the enforcing Lien Claimant.

Termination of the Lien

Once the amounts secured by the Dairy Cattle Supply Lien have been paid and the lien has terminated, the Lien Debtor is entitled to demand that the Lien Claimant formally terminate the lien. Within 20 days of receipt of such demand, the Lien Claimant is required to either file a termination statement with the Secretary of State, or send a termination statement directly to the Lien Debtor. The form of Termination Statement can currently be obtained at http://www.sos.ca.gov/business/ucc/ra_9_ucc-3.pdf.

Forms and Procedure

This brochure contains a procedural checklist and forms for use in perfecting, enforcing and terminating liens under the Dairy Cattle Supply Lien law. The following documents are contained in this brochure.

1. Perfection and Enforcement Checklist 2. Lien Perfection and Enforcement Information Sheet 3. UCC-1 Notice of Claim of Lien, with suggested language (for filing with Secretary of State.) 4. Notice of Claim of Lien (for service on Customer, Secured Parties and Other Required

Parties.) 5. Notice to Make Payment Directly to Dairy Cattle Supply Lien Claimant 6. UCC-3 Termination Statement 7. The Dairy Lien Law (Cal. Food & Ag. Code sections 57401-57414)

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Perfection and Enforcement Checklist

A. At the creation of the relationship, and periodically thereafter

□ Fill out lien perfection and enforcement information sheet □ Obtain other information contained in credit application

B. At the time of providing feed or materials

□ Obtain the name and address of customer’s registered agent (if customer is an entity.)

□ Confirm customer’s state of organization (if customer is an entity). □ Obtain lien search on customer and identify other secured creditors □ File Notice of Claim (UCC-1) with Secretary of State □ Serve Notice of Claim of Lien (with UCC-1 attached) on:

□ Lien Debtor □ Other persons claiming interest in milk proceeds □ Other secured creditors

C. At the time of Enforcement of the Lien

□ Serve Notice of Demand Pursuant to Cal. Food and Ag. Code Section 57413 on: □ Lien Debtor’s Creamery □ Lien Debtor □ Other Persons Claiming Interest in Milk Proceeds □ Other Secured Creditors □ Consider Contacting Counsel to Commence Litigation

D. If the Account Payable is Satisfied in Full and Customer Demands Termination of Lien

□ File Termination Statement with Secretary of State; or □ Send Termination Statement to Lien Debtor

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Lien Perfection and Enforcement Information Sheet

At the time of creation of the customer relationship, and periodically thereafter, the following information should be gathered from the feed customer to enable the supplier to properly perfect and enforce a Dairy Cattle Supply Lien. While this information can generally be obtained from other sources, it is often times easiest to gather the information directly from the feed customer at the commencement of the relationship. Exact Legal Name of Customer: ______________________________________ ______________________________________ ______________________________________ ______________________________________ Billing Address of Customer: ______________________________________ ______________________________________ ______________________________________ ______________________________________ State of Organization of Customer ______________________________________ (if Customer is an entity) Location of Dairy to which feed and materials will be provided: ______________________________________ ______________________________________ ______________________________________ Address of Registered Agent for Service of Process (If customer is an entity.) ______________________________________ ______________________________________ ______________________________________ Address at which individual or partnership conducts business (If customer is an individual or partnership.) ______________________________________ ______________________________________ ______________________________________ Address and contact information of purchasers of customer’s milk and milk products: ______________________________________ ______________________________________ ______________________________________

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Notice of Claim of Lien (Dairy Cattle Supply Lien—Cal. Food and Ag Code

§§57401, et. seq.)

[Date] From: [Name of Lien Claimant]: (“Lien Claimant”) To: [Name of Lien Debtor]:

___________________________ ___________________________ ___________________________

(“Lien Debtor”)

Name of Additional Secured Parties (if any) ___________________________ ___________________________ ___________________________

Location of Dairy to Which Feed and Materials Were Provided.

___________________________ ___________________________ ___________________________

PLEASE TAKE NOTICE pursuant to California Food and Agricultural Code Section

57402, that the Lien Claimant identified above (“Lien Claimant”) asserts a lien on the proceeds of milk and milk products produced from the Lien Debtor identified above (“Lien Debtor”) for the reasonable or agreed charges for feed or materials provided to Lien Debtor

Lien Claimant asserts a lien in the amount of not less than $______________________. A Notice of Lien has been filed with the Secretary of State for the State of California and is attached hereto.

[Unless otherwise indicated, Lien Debtor is not in default of its payment obligations to Lien Creditor as of the date of this Notice of Lien, and this Notice of Lien is filed and served to preserve Lien Claimant’s rights under California Food and Ag Code sections 57401et. seq.]

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If you have any questions, please contact the Lien Claimant at the address set forth above.

__________________________________ Printed Name: _______________________ Title: ______________________________

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Exhibit A—(Notice of Claim of Lien--UCC-1 Financing Statement) [Attach copy of UCC-1 filed with Secretary of State]

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Proof of Service

I, ______________, declare:

At the time of service, I was over 18 years of age. I am employed by __________________ and my business address is _____________________________.

On ________________________, I served a true copy of the following document, a copy

of which is attached:

Notice of Claim of Lien (Dairy Cattle Supply Lien—Cal. Food and Ag Code §§57401 et.seq.) dated _______________________.

by mail on the following persons:

[Insert addresses from above]

I enclosed the document identified above in a sealed envelope or package addressed to the persons at the addresses listed below and placed the envelope for collection and mailing, following our ordinary business practices. I am readily familiar with _____________ [Lien Claimant]'s practice for collecting and processing correspondence for mailing. On the same day that the correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service, in a sealed envelope with postage fully prepaid.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Executed on ______________, at ______________, California.

Signature: _______________________

Printed Name: ____________________ Title: ___________________________

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Instructions for Completion of Form This form is used to perfect a Dairy Cattle Supply Lien. Prior to completing this Notice, the Lien Claimant should do the following:

a. If the Lien Debtor is an entity (corporation, limited partnership or limited liability company), identify the registered agent for service of process by conducting a search of the records of the Secretary of State.

b. Complete a lien search on the Lien Debtor with the California Secretary of State c. If the Lien Debtor is an entity, complete a lien search with the Secretary of State of

the state in which such entity is organized, if different than California.

Completing the Notice

1. Date. The Notice should contain the actual date that the Lien Claimant files the notice.

2. Name of Lien Debtor. The Notice must set forth the exact legal name of the Lien Debtor and its last known address. This information should be set forth on the Lien Perfection and Enforcement Information Sheet.

3. Secured Parties. The Notice should set forth the name and address of other secured creditors claiming a lien or interest in the milk proceeds. These names and secured creditors will be listed on the lien search obtained on the Lien Debtor, as discussed above.

4. Location of Dairy. The Notice must set forth the location of the dairy to which feed or materials were provided. This information may be on the Information Sheet or on applicable transportation documents.

5. Amount. The Notice contains an area for setting forth the amount of the lien. In general, the amount is the lesser of (i) the unpaid amount owed by the Lien Debtor, or (ii) the amount of reasonable or agreed charges for feed for a 60 –day period.

6. Signature. The Notice need not be signed, but the form contains a signature line to facilitate communications between the parties.

7. UCC-1 Financing Statement. A copy of the filed Notice of Claim of Lien (the form filed with the Secretary of State) must be attached and served on the parties named in the form.

Serving the Notice and completing the proof of service

8. Proof of Service. A proof of service will constitute evidence that the form was properly served on necessary persons. The proof of service should contain the name and signature of the individual mailing the notice and the names of the parties being served. The original should be retained in the Lien Claimant’s files.

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9. The Notice of Claim of Lien must be served within 10 days of filing with the Secretary of State on the Lien Debtor, and all persons holding liens on the milk proceeds subject to the lien.  

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[Lien Claimant Letterhead]

[Date]

Notice to Make Payment Directly to Dairy Cattle Supply Lien Claimant

(Cal. Food and Ag. Code Section 57413) To: [Creamery] ______________________ ______________________ ______________________

Lien Debtor: ______________________

______________________ ______________________

Secured Parties:

____________________ ____________________ ____________________ ____________________ ____________________ ____________________

Please Take Notice that ___________________ (“Lien Claimant”) asserts a lien pursuant to the Dairy Cattle Supply Lien law (Cal. Food & Agricultural Code section 57401 et. seq.) on proceeds of milk and milk products owed to the Lien Debtor identified above. The lien secures a claim in the amount of $_________________. Lien Debtor is in default of his/her/its obligations to Lien Claimant, and Lien Claimant is entitled to exercise all rights and remedies provided by the Dairy Cattle Supply Lien law.

Please Take Further Notice that, pursuant to Section 57413 of the California Food and Agricultural Code, Lien Claimant demands that, no later than the date payment is otherwise due to Lien Debtor but in no event earlier than 15 days prior to the date of this notice, _____________________ ________________________ make payment to Lien Claimant in the lesser of (i) amounts owed to Lien Debtor for milk or milk products provided by Lien Debtor or (ii) $________________ (representing the amount secured by Lien Claimant’s lien.) Payment should be made as follows:

__________________________ __________________________ __________________________

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If you have any questions, please feel free to contact the undersigned. __________________________________ Printed Name:_______________________ Title:______________________________

Proof of Service

I, ______________, declare:

At the time of service, I was over 18 years of age. I am employed by _________________________________________________ and my business address is __________________________________________________.

On ________________________, I served true copies of the following document, a copy

of which is attached:

Notice to Make Payment Directly to Dairy Cattle Supply Lien Claimant (Cal. Food and Ag. Code Section 57413) dated _____________, ________.

on the following persons or entities:

[Insert addresses from above]

I enclosed the document identified above in a sealed envelope or package addressed to the persons at the addresses listed below and placed the envelope for collection and mailing, following our ordinary business practices. I am readily familiar with _____________ [Lien Claimant]'s practice for collecting and processing correspondence for mailing. On the same day that the correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service, in a sealed envelope with postage fully prepaid.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Executed on ______________, at ______________, California.

Signature: _______________________

Printed Name: ____________________ Title: ___________________________

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Instructions for Preparation and Service of Form This notice is used if the Lien Claimant decides to enforce the Dairy Cattle Supply Lien utilizing the non-judicial remedy of Section 57413(a)(2). Prior to Preparation and Service of the Notice

a. If the Lien Debtor is an entity (corporation, limited partnership or limited liability company), identify the registered agent for service of process by conducting a search of the records of the Secretary of State.

b. Complete a lien search on the Lien Debtor with the California Secretary of State c. If the Lien Debtor is an entity, conduct a lien search with the Secretary of State of

the state in which such entity is organized, if different than California. Preparation of the Notice

1. The Notice should be printed on the Lien Claimant’s letterhead. 2. Date. The Notice should contain the actual date that the Lien Claimant serves the

notice. 3. Name of Creamery or Handler. The Notice should be directed to the creamery or

handler that owes milk proceeds subject to the Lien Claimant’s lien. This information should be set forth on the Lien Perfection and Enforcement Information Sheet.

4. Name of Lien Debtor. The Notice must set forth the exact legal name of the Lien Debtor and its last known address. This information should be set forth on the Lien Perfection and Enforcement Information Sheet.

5. Secured Parties. The Notice should set forth the name and address of other secured creditors claiming a lien or interest in the milk proceeds. These names and secured creditors will be listed on the lien search obtained on the Lien Debtor, as discussed above.

6. Amount. The Notice contains an area for setting forth the amount of the lien. In general, the amount is the lesser of (i) the unpaid amount owed by the Lien Debtor, or (ii) the amount of reasonable or agreed charges for feed for a 60 –day period.

7. Payment Information. The Notice should contain payment directions for the creamery or handler to direct payment.

8. Signature. The Notice should be signed. 9. Proof of Service. A proof of service will constitute evidence that the form was

properly served on necessary persons. The proof of service should contain the name and signature of the individual mailing the notice and the names of the parties being served. The original should be retained in the Lien Claimant’s files.

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Cal.Food & Agric.Code § 57401

§ 57401. Definitions

(a) The definitions in this section govern the construction of this chapter.

(b) “Feed or materials” means commercial feed, grain, forage, feed ingredients, mineral feed, drugs, animal health products, customer-formula feed, any mixture or preparation for feeding animals, any of the constituent nutrients of an animal ration, or any other food which is used for the feeding of dairy cattle.

(c) “Person obligated on any proceeds” means a handler, as defined in Section 61826, who is in possession of proceeds.

(d) “Proceeds” means funds derived from the sale of milk or milk products which are payable to the lien debtor by the possessor of the funds, except for any of the following:

(1) Deductions for taxes, fees, and assessments.

(2) Funds due or owing milk processing cooperative associations organized and operating pursuant to Chapter 1 (commencing with Section 54001).

(3) Funds retained by the cooperative association.

(4) Deductions made pursuant to a court order.

(5) Deductions due or owing the buyer of the milk for hauling services provided by the buyer pursuant to subdivision (e) of Section 62096 and deductions due or owing the buyer for the testing of milk for purposes of payment pursuant to Section 34231.

(e) “Raising or maintaining of dairy cattle” means feeding, pasturing, caring for, and managing dairy cattle kept or raised for use or profit.

(f) “Reasonable or agreed charges” means the agreed price, if any, for the feed and materials sold to the lien debtor, at the lien debtor's request. If there is no agreed price or a method for determining price which is agreed upon, “reasonable or agreed charges” means the reasonable value of the feed or materials as of the date of delivery.

§ 57402. Lien

A person who provides feed or materials to aid the raising or maintaining of dairy cattle or offspring therefrom has a lien upon the proceeds of the milk or milk products produced from the dairy cattle, for the reasonable or agreed charges for the feed or materials provided and for the costs of enforcing the lien. However, the amount of charges secured by the lien cannot exceed an amount equal to the reasonable or agreed charges for feed or material provided within a 60-day period, and only two providers of feed or materials shall have an enforceable lien at any time according to the priority set forth in Section 57406. Only one lien under this chapter per dairy producer is available per affiliated business supplier.

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§ 57403. Proceeds; duration of notice of claim of lien

(a) The lien created pursuant to this chapter attaches to proceeds.

(b) Except as otherwise provided in this chapter, the notice of claim of lien shall remain in effect, and no new notice of claim of lien shall be required in order to maintain the lien, as long as the person who provides feed or materials either (1) remains unpaid for amounts secured by the lien, or (2) continues to provide feed or materials on a regular basis to the lien debtor. For purposes of this section, providing feed or materials shall not be deemed to be made on a regular basis if a period of more than 30 days elapses between deliveries.

§ 57405. Notice of claim; filing; contents; form; termination statement

The lien created by this chapter shall be perfected by the filing of a notice of claim of lien with the Secretary of State and service of the notice of claim of lien pursuant to subdivision (e).

(a) The person who provides feed or materials may, at any time, file in the manner and at the place set forth in this section, the notice of claim of lien.

(b) The notice of claim of lien shall, at a minimum, set forth all of the following information:

(1) The name and address of the lien claimant.

(2) The last known name and address of the lien debtor.

(3) The location of the dairy to which the feed and materials were provided.

(4) That the lien claimant has a dairy cattle supply lien pursuant to Section 57402.

(c) The notice of claim of lien shall be filed on a form which is the standard form of original financing statement prescribed by the Secretary of State pursuant to Section 9521 of the Commercial Code. The standard form shall be completed with the following changes:

(1) The lien claimant may be identified either as lien claimant or as secured party.

(2) In the space for the description of the collateral there shall instead be entered the statement substantially as set forth in paragraphs (3) and (4) of subdivision (b).

(d) The notice of claim of lien shall be filed, indexed, and marked in the office of the Secretary of State in the same manner as a financing statement is filed, indexed, and marked pursuant to Section 9519 of the Commercial Code.

(e)(1) The lien claimant shall provide written notice of the claim of lien to the following persons within 10 days of the date of the filing with the office of the Secretary of State:

(A) The lien debtor.

(B) Any person from which the lien claimant has received, before the lien claimant files the notice, notification of a claim of an interest in the proceeds.

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(C) Any other secured party or lienholder that, 10 days before the filing of the notice, held a security interest in or other lien on the proceeds perfected by the filing of a financing statement that satisfied all of the following conditions:

(i) The statement identified the proceeds by referring to all assets, all personal property, goods, farm products, milk, or milk products, or otherwise identified the proceeds by any other description sufficient pursuant to Section 9108 of the Commercial Code.

(ii) The statement was indexed under the debtor's name as of that date.

(iii) The statement was filed against the debtor covering the proceeds as of that date and was filed in the office or offices in which a financing statement may be filed pursuant to Section 9501 of the Commercial Code.

(D) Any other secured party that, 10 days before the filing of the notice, held a security interest in the proceeds perfected by compliance with a statute, regulation, or treaty described in subdivision (a) of Section 9311 of the Commercial Code.

(2) If the lien debtor is an entity, notice shall be given to the lien debtor's registered agent for service of process. If the lien debtor is an individual or general partnership, the notice shall be given at any address at which the individual conducts business.

(3) Notice to be given to a person pursuant to subparagraph (B) of paragraph (1) shall be given

to that person at the address set forth in the notification of claim of interest given by that person or, if no address is set forth, to the person's registered agent for service of process if the person is an entity or at any address at which the person does business if the person is an individual or general partnership.

(4) Notice given to a secured party pursuant to subparagraph (C) of paragraph (1) shall be given

to the secured party at the address set forth in the financing statement on file for the secured party.

(5) Notice to be given to a secured party pursuant to subparagraph (D) of paragraph (1) shall be

given to the secured party at the address set forth in the document creating the perfection and compliance or, if no address is set forth, to the secured party's registered agent for service of process if the secured party is an entity or at an address at which the secured party does business if the secured party is an individual or general partnership.

(f) For the purpose of the Secretary of State's index pursuant to Sections 9515, 9516, and 9522

of the Commercial Code and for the purpose of the issuance of a certificate pursuant to Section 9519 or 9528 of the Commercial Code, the Secretary of State shall identify a notice pursuant to this section as a financing statement.

(g) Within 20 days after a lien claimant receives a demand from a lien debtor, the lien claimant

shall send to the lien debtor a termination statement for the notice of claim of lien or file the termination statement in the office of the Secretary of State, if the lien perfected by the notice of claim of lien has terminated pursuant to the provisions of Section 57403. Upon the filing

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of a termination statement with the office of the Secretary of State, the notice of claim of lien to which the termination statement relates ceases to be effective.

§ 57406. Priority

The priority of conflicting interests, agricultural liens, and the agricultural lien created under this chapter shall be governed by subdivisions (a) to (f), inclusive, of Section 9322 of the Commercial Code.

§ 57407. Secured transactions requirements

Except to the extent specifically set forth in this chapter, the lien created by this chapter shall be subject to Division 9 (commencing with Section 9101) of the Commercial Code.

§ 57408. Certificate of lien information; fee

A member of the public may obtain a certificate identifying whether there is a lien on file and any notice of claim of lien naming a particular debtor, and if so, giving the date and time of filing of each notice, and the names and addresses of each lienholder therein. The fee for the certificate is the same as the fee for a certificate issued pursuant to Section 9525 of the Commercial Code.

§ 57409. Copy of notice of claim; public information; fee

A member of the public may obtain a copy of any notice of claim of lien filed pursuant to this chapter, including notices affecting the notices. The fee for these copies shall be the same as that prescribed in Section 9525 of the Commercial Code.

§ 57410. Regulations

The Secretary of State may adopt any regulations necessary to carry out his or her duties pursuant to this chapter, including prescribing necessary forms.

§ 57411. Assignment or transfer; statement

A lien created pursuant to this chapter is assignable or transferable by the holder of the lien, with full rights of enforcement. A lienholder's statement of assignment or transfer shall be filed with the Secretary of State in the same manner as a secured party's statement of assignment or transfer as prescribed in Section 9514 of the Commercial Code.

§ 57412. Repealed by Stats.2012, c. 309 (S.B.592), § 6

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§ 57413. Foreclosure; enforcement of judgment; surplus; attachment or temporary protective order; payments by others; release

(a) After payment default by the lien debtor, the lien claimant may foreclose on a lien created by this chapter in the following manners:

(1) The lien claimant may foreclose in an action to recover the reasonable or agreed charges for feed and materials delivered. In such an action, the final judgment may be enforced pursuant to Title 9 (commencing with Section 680.010) of Part 2 of the Code of Civil Procedure.

(2) Provided that the lien claimant provides concurrent notice to the lien debtor and the parties set forth in subdivision (e) of Section 57405, the lien claimant may notify any person obligated on any proceeds subject to the lien created under this chapter to make payment to, or otherwise render performance to or for the benefit of, the lien claimant, provided that the lien claimant may not demand that payment or performance be made at any time prior to 15 calendar days following the date of notice.

(3) The lien claimant may enforce the obligations of any person obligated on any proceeds subject to the lien created under this chapter and exercise the rights of the lien debtor with respect to the proceeds and any property that secures the right to the proceeds subject to the lien created under this chapter.

(b) A lien claimant that receives proceeds pursuant to a notice provided pursuant to paragraph (2) of subdivision (a) shall account to, and pay the lien debtor for, any surplus, and the lien debtor shall be liable for any deficiency.

(c) Nothing in this chapter shall prohibit a lien claimant from applying pursuant to Title 6.5 (commencing with Section 481.010) of Part 2 of the Code of Civil Procedure for a right to attach order and a writ of attachment, or temporary protective order, by filing an application for the order, writ, or temporary protective order with the court in which the action is brought.

(d) Notwithstanding the receipt of a notice pursuant to paragraph (2) of subdivision (a), a person obligated on any proceeds subject to a lien created under this chapter shall have no liability to a lien claimant for failure to comply with that notice to the extent that the person obligated on the proceeds pays the proceeds subject to the notice as follows:

(1) To a person holding a lien or security interest that is prior to the lien of the lien claimant issuing the notice.

(2) In satisfaction of a contractual assignment or valid notice provided pursuant to Section 9607 of the Commercial Code has been received from the person obligated on the proceeds prior to the receipt of the notice pursuant to paragraph (2) of subdivision (a).

(e) A person obligated on any proceeds subject to the lien created under this chapter and who makes payment pursuant to the notice required by paragraph (2) of subdivision (a) shall not be deemed, to the extent of that payment, to be in violation of the applicable provisions of

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law relating to failure to pay the amounts to the lien debtor and shall not be deemed to have engaged in an unlawful trade practice.

(f) A lien debtor may secure a release of a lien created under this chapter by doing one of the following:

(1) Paying the amount secured by the lien.

(2) Depositing with the Secretary of Food and Agriculture a surety bond that is executed by the lien debtor as principal and by a surety company that is qualified and authorized to do business in this state as a surety in an amount that equals the current amount secured by the lien. If the lien debtor fails to pay the claims, up to the amount of the bond, of the lien claimant within 35 days after entry of final judgment in favor of the lien claimant, the surety shall pay all lawful claims that are covered by the amount of the lien, up to the amount of the bond, if an action is filed on the bond.

§ 57414. Termination statement; liability for failure to send statement; filing

(a) When a lien claimant receives payment for amounts secured by the lien and the lien claimant has not been providing feed or materials for a period of 30 consecutive days, the lien claimant shall, on written demand by the debtor, send the debtor a statement that he or she no longer claims a security interest under the statement, which shall be identified by date, names of parties thereto, and file number. If the affected lienholder of record fails to send such a termination statement within 10 days after proper demand therefor, he or she shall be liable to the debtor for all actual damages suffered by the debtor by reason of this failure, and, if the failure is in bad faith, for a penalty of one hundred dollars ($100).

(b) The filing officer shall mark each termination statement with the date and time of filing and shall index the statement under the name of the debtor and under the file number of the original lien. If the filing officer has a microfilm or other photographic record of the lien and related filings, he or she may remove the originals from the files at any time after receipt of the termination statement and destroy them, or if he or she does not have the record, he or she may remove them from those files at any time after one year after receipt of the termination statement and destroy them.

Cover for Dairy Cattle Supply Lien Brochure 2013Table of ContentsAppendix A. Memo re_ Dairy Supply Lien (3_21_13Appendix B. Perfection and Enforcement Checklist 3_21_13Appendix C. Checklist for Information from Customer Needed to Perfect and Enforce Dairy Cattle Supply Lien (2)Appendix D. Notice of Claim of LienAppendix E. UCC-1 (with suggested language)Appendix F. v2 Notice to Make Payment 3_21_13Appendix G. UCC-3Appendix H. WEST_S ANN CAL FOOD AGRIC CODE § 57401